Full Form of CFO

Publication Date :

20 Jan, 2020

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Full-Form of CFO (Chief Financial Officer)

The full form of CFO is Chief Financial Officer. It is a senior-level officer of the company who is accountable for the overall finance functions of the company and has the authority to make financial decisions for the company.

Full-Form of CFO (Chief Financial Officer)

A CFO stands for Chief Financial Officer. This person holds a high-ranking position within a company and manages all financial matters. They have the power to make critical financial decisions for the company.
To become a CFO, one needs a bachelor's degree in accounting or finance and additional degrees and experience in the finance industry.
A CFO does more than manage finances. They use their knowledge and experience to help a company grow and succeed. Their responsibilities have expanded to include various roles within the company.

Role

A CFO must utilize his financial knowledge and experience to drive the company towards growth and success. This is not limited to maintaining the accounts or reviewing the financial numbers. Instead, the chief financial officer's role has diversified over the past years. As a result, this can be seen playing the following roles in a company.

Planning strategies for the company's growth by making important and relevant financial decisions. The decisions should be in line with the long-term goals of the company.
Acting as a leader, taking ownership of the company's financial results, and planning the future course of action.
It is identifying the team's strengths and utilizing them for the company's better financial performance.
As chief financial officers, the company's face for dealings with the banks, investors, customers, and suppliers is one of the company's senior-most persons.

Qualifications Required for CFO

In general, a bachelor's in accounts or finance or having degrees like MBA, CMA, or CPA is considered a criterion for appointing a chief financial officer apart from a considerable amount of experience in the finance field.

Skills Required for CFO

#1 - Leadership

The chief financial officer is a senior-level executive expected to lead a team of members. Therefore, it is very important for him that he advises his team whenever required and brings the best out of his team.

#2 - Understanding

He should have sound knowledge and understanding of the company’s business operations to ensure that correct financial decisions can be taken at each functional level.

#3 - Planning

He should be able to plan and strategize toward the company's financial growth and ensure its execution.

#4 - Good Communication

As mentioned earlier, the chief financial officer acts as the face of the company. Thus, while dealing with outsiders, he must portray good communication skills.

#5 - Technical Knowledge

The chief financial officer shall have sound technical knowledge in finance to make correct financial decisions.

#6 - Risk Management

A chief financial officer is not only expected to plan strategies for the future but also manage the risk as and when it arises.

Key Responsibilities of CFO

Responsibilities of Chief Financial Officer

Review the company's financial information and present the financial statements to the board of directors.
To ensure the availability of the funds with the company by making decisions regarding the possible funding (like raising a loan, share capital, etc.).
To prepare the company’s financial budget and ensure that the same is abided by various teams in the company.
To vet the company's legal contracts to evaluate their financial impact and liabilities.
To implement finance-related controls in the company.
To represent the company before the investors and bankers for the possible raising of funds by the company.
To ensure the improvement of the financial performance of the company by taking necessary measures.

CFO Job Prospects

This is one of the highest and most important positions in the company. This is a position one holds after having so much experience and knowledge. Companies will not let go of their good CFOs even in the hardest economic scenarios, as CFOs are those persons who can plan to move the company away from the financial tension. Thus, job prospects are very bright for CFOs as almost every company hires a CFO to head their finance division.

CFO Salary

As stated earlier, the chief financial officer is one of the top positions in the company. Being such an important position, These are highly paid company employees. Per one survey, the average salary of a chief financial officer in the U.S. comes to a whopping amount of $3,71,548 as of April 2019. Quite interesting, right?

Conclusion

Becoming a company's chief financial officer will take a lot of experience and knowledge. The efforts that you make to reach there will surely be worth it. Also, do not forget the important responsibilities that await a CFO.

Frequently Asked Questions (FAQs)

Is the CFO higher than the CEO?

The CEO holds the most senior position in an organization. CEOs and CFOs are positioned differently in the organizational hierarchy despite having 'Chief' in their titles. Typically, the CEO is accountable to the Board of Directors, whereas the CFO reports to the CEO.

. Is the CFO higher than the COO?

t is important to note that the COO holds a higher position than the CFO. The CFO focuses on financial analysis, performance reporting, budget preparation, and cost monitoring. The COO, on the other hand, oversees the organization's day-to-day operations.

Are CFOs accountants?

No. Typically, a CFO and an accountant have different roles. Accountants manage bookkeeping responsibilities and tax filings, while a CFO concentrates on forecasting and planning for the company's financial future.

How does a CFO manage financial risks?

CFOs manage risks by identifying potential threats to an organization's financial stability, implementing risk mitigation strategies, maintaining adequate insurance, optimizing capital allocation, and ensuring compliance with regulations.